Sustainable Development Through Energy Transition: The Role of Natural Resources and Gross Fixed Capital in China

Governments and politicians are very concerned about the environmental sustainability of the energy sector, particularly with regard to oil and gas. To assist in achieving global climate objectives, the clean energy transition involves moving away from a fossil-fuel-based economy and toward one that is dominated by clean, renewable energy. This reduces carbon emissions. Here, we consider the moderating effects of natural resources, urbanization, and energy consumption between 1990 and 2022 as we analyze the impact of China’s energy transition and the external balance of goods and services on the country’s environmental quality. We used ARDL econometric techniques and present a thorough empirical investigation. Overall, the findings indicate that the ecological footprint is adversely correlated with energy transition, natural resource use, the external balance of goods and services, and renewable energy usage. Urbanization and the use of non-renewable energy, however, are positively associated with that footprint. The use of renewable energy sources, richness of natural resources, and energy transition all contribute to environmental sustainability. The sustainability of the environment is weakened by urbanization and non-renewable energy usage. It is recommended that policymakers facilitate the acceleration of the energy transition by utilizing renewable energy, promoting policies that create favorable conditions for the widespread adoption of renewables, and balancing the nation’s urban structure in a way that enhances self-sufficient urban development and ensures a sustainable future. Limitations of this study and future directions for research are outlined.